Combining international cap-and-trade with national carbon taxes


Heindl, Peter ; Wood, Peter J. ; Jotzo, Frank


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URL: https://ub-madoc.bib.uni-mannheim.de/37309
URN: urn:nbn:de:bsz:180-madoc-373091
Document Type: Working paper
Year of publication: 2014
The title of a journal, publication series: ZEW Discussion Papers
Volume: 14-086
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: Q53 , H23 , H41,
Keywords (English): Prices vs. quantities , linking , cap-and-trade , carbon tax , uncertainty , EU Emissions Trading Scheme
Abstract: This paper examines the effects of combining an international cap-and-trade scheme with national carbon taxes. We consider a two-country stochastic partial equilibrium model with log-normally distributed uncertainty. The situation is analogous to the situation where European countries impose national carbon taxes in addition to the EU emissions trading. The allowance price in the joint cap-and-trade scheme depends on the tax rate, the relative size of countries and abatement options, the magnitude of uncertainty, and correlation of abatement costs. In most cases, the additional tax will not lead to additional production of the public good beyond the fixed targets. The additional tax results in higher costs of abatement to the country introducing the additional tax, and higher costs overall.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Heindl, Peter ; Wood, Peter J. ; Jotzo, Frank (2014) Combining international cap-and-trade with national carbon taxes. Open Access ZEW Discussion Papers Mannheim 14-086 [Working paper]
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